Retail Marketing Management

Module 2

Retail Marketing Mix

Set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market. 4 Ps Product Price Place Promotion Additional 3 Ps of Service Marketing: People, Process & Physical evidence.

Product: Totality of the offer which includes services, store lay out, merchandise, brand and features/benefits. Price: What the customer has to be willing to pay in exchange for the benefits of the product and channel service. Promotion: Means by which the retail offer is communicated to the target groups Place: Based on the retailers activities in supplying a channel service. Includes the logistics of inventory management systems.

Product
Retailing as a product is a combination of: Service Quality Merchandise Brand name Features and benefits Store Layout

Store Lay out

The store is a product in its own right. The customers product decisions can be enhanced/ruined by the type of planned store layout. Stores should be designed to facilitate the movement of customers, to create a planned store experience and to allow the optimum presentation of the merchandise. Important aspects of store layout Display of merchandise Atmospherics: Use of space, colour, walls, pillars, floor coverings, lighting, music, scent etc.

Atmospherics and store lay out affect: Speed at which consumers move from one point to another in the store Degree of well being felt by the staff working in the store environment Total sales revenue, sales pattern and type of product sold Image the consumer has of the store and its merchandise.

Retail Pricing
Price is the monetary value assigned by the seller to something purchased, sold or offered for sale and on transaction by a buyer, as their willingness to pay for the benefits the product and channel service delivers. Price Sensitivity Elastic and inelastic demand Retail mark ups should vary inversely with price elasticity of demand if profits are to be maximised.

Factors affecting price sensitivity Perceived substitutes effect Unique value effect Importance of purchase effect Difficult comparison effect Price quality effect Expenditure effect Fairness effect

Further factors influencing pricing Perishable nature of products Competitive nature of the industry Cost control Seasonal demand Psychological aspects of both quality and status Intermediaries Volatility in the market

Approaches to pricing
Cost-oriented pricing
Cost plus pricing Rate of return pricing

Demand Oriented Pricing

Discrimination Pricing Backward pricing Skimming pricing Leader pricing Competitive pricing Market penetration Psychological pricing Everyday Low Pricing

Markdown policy considerations for retailers

Mark down is the sale of the products below the marked price. Mark down decisions are taken due to several reasons:
Competitor activity affecting demand Merchandise didnt meet consumer needs/preferences Economic/seasonal problems Overstocking of merchandise or poor stock keeping Quality of merchandise inferior due to manufacture or damage

 Problems of seasonality and poor timing of offer Merchandise became shop soiled or damaged on the shop floor Need to release the display space for other merchandise Selling space/display of the merchandise had been inadequate or in the wrong location Policy decision taken to develop improved customer goodwill through markdowns Initial markdown being too small to achieve desired sales results Sales staff not being briefed properly or encouraged to sell old as well as new lines.

Retail Promotion
Mix of communication activities carried out to influence consumer perceptions, attitudes and behaviour in order to increase store loyalty, store visits and product purchase. Forms of promotion: Advertising Sales promotion Public Relations Personal Selling.

Advertising
Any paid form of non-personal communication through the media about a product, that has an identified sponsor. Follows the principle of AIDA A - Capture Attention I - Arouse Interest D - Create Desire A - Inspire to take Action

Types of Advertising
Product Advertising Markdown Event Advertising Institutional advertising Co-operative advertising

Sales Promotion
Any paid non-personal marketing communication activity, other than advertising, which offers an incentive to induce a desired result from potential customers, trade intermediaries or the sales force. Types of promotions:
Point of purchase/point of sale Contests Sweepstakes Coupons Frequent shopper Prizes Demonstrations Referral gifts 2 for price of 1 Branded giveaways Samples Premiums Special events

Relationship Marketing-Loyalty Schemes

Aims to: Build greater customer loyalty and retention Develop methods of creating long term relationships Lead ultimately to increased sales and profits RM requires effective acquisition and retention of customers. Relationship Marketing Ladder Prospect-Customer-Client(emphasis on winning new customers/customer catching) -Supporter-Advocate-Partner.(emphasis on developing and enhancing relationships/customer keeping)

Personal Selling
Gain benefit through face to face or telephone contact between the sellers representative and those people with whom the seller wants to communicate Selling is a process of steps whereby the salesperson build up a personal obligation for the customer to make a purchase.

Retail selling process:

Preparing through skills and knowledge Anticipating and identifying a prospective sale Method of approaching the potential customer and task Presenting the features and benefits Dealing with consumer concerns Building obligation and commitment Establishing affinity and relationship

Public relations
Non personal communication which changes opinion or achieves coverage in a mass medium, which is not paid for by the source. Includes press releases, organising press conferences, organising events etc

Other important promotional tools

Visual merchandising Non personal in-store presentation and exhibition of merchandise along with printed forms of communication. Includes visual materials and window displays like banners, counter cards video screen displays, floor stand displays etc. Sponsorship Direct Marketing Bill boards